FGV Annual Report 2015

219 WHO WE ARE & WHAT WE DO OUR STRATEGIC INTENT & PERFORMANCE HOWWE ARE GOVERNED CREATING SUSTAINABLE VALUE OUR NUMBERS ADDITIONAL INFORMATION DETAILS OF THE ANNUAL GENERAL MEETING Notes to the Financial Statements For The Financial Year Ended 31 December 2015 ADDRESSING OUR RISKS & OPPORTUNITIES Felda Global Ventures Holdings Berhad Annual Integrated Report 2015 4 FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Financial risk management policies (continued) Market risk (continued) (ii) Price risk (continued) Commodity price risk The Group is exposed to commodity price risk since the prices crude palm oil (“CPO”), sugar and their derivatives are subject to fluctuations due to unpredictable factors such as weather, changes in global demand and production, crude oil prices and global production of similar and competing crops. Revenue of the Group is therefore subject to price fluctuations in the commodity market. The Group uses derivative contracts to mitigate a portion of such risks. As at 31 December 2015, sensitivity analysis has been performed based on the Group’s exposure to commodity prices as at settlement date for the Group’s LLA liability and commodity derivative portfolios. A 10% increase in certain commodity price indexes or a RM100 increase in CPO prices assumed in calculating the LLA liability, with all other variables being held constant, would increase or decrease the Group’s profit after tax, by type of significant commodity and financial liability, by approximately: 2015 2014 RM’000 RM’000 - Palm oil 27,443 3,986 - Sugar - 2,457 - LLA liability (124,361) (121,950) Net decrease (96,918) (115,507) A 10% decrease in certain commodity price indexes or a RM100 decrease in CPO prices assumed in calculating the LLA liability, with all other variables being held constant, would increase or decrease the Group’s profit after tax, by type of significant commodity and financial liability, by approximately: 2015 2014 RM’000 RM’000 - Palm oil (27,443) (3,986) - Sugar - (2,457) - LLA liability 130,361 128,850 Net increase 102,918 122,407